Japan Petroleum to expand Canadian oil sands project

CALGARY, Alberta (Reuters) - Japan Canada Oil Sands Ltd, a
unit of Japan Petroleum Exploration Co said on Thursday it
plans to expand its Canadian oil sands operation to produce up
to an additional 35,000 barrels a day by 2014.

The company, which has run a pilot project for the
Hangingstone oil sands operation for the past 10 years, said it
would seek regulatory approval for the expansion of its thermal
oil sands project in 2010.

Its current operation produces about 8,000 barrels of
tar-like bitumen per day.

Yukio Kishigami, executive vice-president of Japan Canada
Oil Sands, said the company is not yet ready to detail the cost
of the expansion. A budget will be produced as it completes
work leading to the regulatory application.

The Hangingstone expansion is the latest in more than C$100
billion in projects planned or underway in the oil sands region
of northern Alberta, which contain the biggest oil reserves
outside of the Middle East. Production from the region is set
to nearly triple to 3 million barrels a day by 2015.

The project is one of just a few investments by Japanese
companies in the region. Last year, INPEX Holdings Inc agreed
to buy a 10 percent in Total SA's Joslyn oil sands project and
a unit of Nippon Oil Corp owns a minor stake in the Syncrude
Canada joint venture.

While the Joslyn project will mostly use mining technology,
Hangingstone, 50 kilometers (31 miles) southwest of Fort
McMurray, Alberta, will use steam-assisted gravity drainage, or
SAGD.

The SAGD method pumps steam into the ground to liquefy the
tarry bitumen so it can flow to the surface.